Two days late, Hotmail gets an upgrade

Members of Microsoft's Hotmail e-mail service were greeted Thursday morning with a new look as the company rolled out a series of upgrades to its free e-mail service, including a new user interface as well as more signs of integration with Microsoft's much-ballyhooed .Net initiative.

The upgrade was originally scheduled to take place on Tuesday, but Microsoft delayed this and told journalists to expect the launch on Wednesday morning. However, at the end of the day, the upgrade had not taken place. Reached late Wednesday, a company spokesman said Microsoft was looking into the unscheduled delay and the reason behind it had not yet been identified.

When the upgrade went live on Thursday, users of the service could immediately see Microsoft's MSN Internet division had altered the look of Hotmail for the first time in three years, bringing the popular service up to date with its newer applications for the Internet, including MSN Explorer, the Web browser included with the subscription-based MSN Internet Service.

"This is a pretty significant change for Hotmail," said Rebecca Thompson, a product manager at MSN. "Consumers will definitely notice the difference."

The newly designed site includes a beefed up junk-mail filter to fight off unsolicited e-mail, or spam, quick links to frequently used contacts, an e-mail template similar to that of Microsoft's Outlook e-mail application, and the addition of Swedish and Dutch to its list of 12 languages supported on the service.

But the most significant addition to the service is the integration of Microsoft's early set of Web services building blocks, code-named Hailstorm, which form the basis for its .Net initiative. Those early Web services include the MSN Messenger instant messaging service, authentication services through Passport, as well as MSN Calendar, a group calendaring application.

The company will also include Hailstorm services in the next version of its Windows operating system, Windows XP, which is due for release on Oct. 25.

"One of the things that users can expect is that there will be more and more integration between Microsoft's services . . . especially as those services take more advantage of .Net," said Chris Le Tocq, principal analyst with Guernsey Research.

Although Hotmail has previously made use of Passport to allow users to sign on to the service, the new Hotmail will incorporate the remainder of those Hailstorm services. Links to MSN Messenger and MSN Calendar are built into the new user interface and instant messenger contacts, or buddy lists, show up on the Hotmail home page.

"Microsoft is taking steps to include its Hailstorm services into all of its products," Le Tocq said. "Hotmail can be expected to be a key beneficiary of that integration."

Hotmail currently has about 110 million active members, according to Microsoft, and is growing organically and through acquisitions. Microsoft recently acquired its way into the New Zealand and Latin American markets, for example. Though still far from reaching industry leader AOL Time Warner Inc. for market share, the company is leveraging its software and Internet properties to rope in a larger user base.

Unlike with most of its competitors, though, Hotmail users currently don't pay to use the service, a trend Le Tocq said will gradually change as the company attempts to add value with additional services.

For example, similar to Yahoo Inc.'s free e-mail service, Microsoft may start charging users on a subscription basis to increase the amount of storage each user gets with an e-mail account. Currently, members get 2M bytes of storage for free, and could potentially pay for an increase, Le Tocq said. Other fee-based services are likely to come as Microsoft introduces more services based on .Net.

"As far as adding subscription services, MSN in general is looking at the business model," Thompson said. "We don't have anything in this upgrade, but it is something that we're looking forward to."

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